Tuesday, November 22, 2005

Wayward mobility

I had a good lunch today with Dean Bubley of Disruptive Analysis. Turns out we worked together at Credit Lyonnais back during Bubble 1.0, if only for about five minutes, and in separate parts of the business (his small-cap team soon left en masse to another house, and I found my own exit a few months later). Anyway, he's got an acerbic style which I like, as in the case of his take on MMS:

"Yes! You can take lousy low-quality images, compress the living daylights out of them further, put them in a cumbersomely-constructed message, and spend lots of money to send them to someone else, who might occasionally receive them OK. No! Don't just upload the image to a PC and email it for free more easily instead."

He's certainly got a good point. As I think I've stated before, I almost never send an MMS, and on the rare occasion when I do, it's almost always one included in my monthly tariff, and invariably to my Flickr! account: one image transfer, to a potentially unlimited viewing audience, in perpetuity. Thinking back to the Bubble 1.0 era business projections I recall seeing (voice ARPU stays flat over the forecast period, with data growing to a commensurate level - hey, presto, ARPU doubles by 2010!), I am the nightmare customer, 2005-style.

I'm not alone. A cursory examination of European mobile ARPU (as reported by the players, caveat lector) shows that data revenues account for anywhere between 12 - 19% of ARPU, and typically around 75% of this is pure SMS. Strip this out, and we get voice ARPU down anywhere from two to more than 10% YoY, depending on the player and market. Given that voice is the only place where any telco has ever made money, there is an understandable scramble to replenish the top line and invent a public case for margin stability.

Then again, it only takes something like this to wipe a lot of potential revenue streams off the radar screen entirely. Sky UK, Sky Italia, Premiere, Canal+ , EuroCable, DSL players, anyone but the mobile players, may become the prime movers in mobile (okay, portable) content, precisely because they aren't explicitly trying to make money off of a discreet billable event, as the mobile players are natually obsessed with.